CEOs’ Corner: Governance Takes More Than Passion

Consultant Mimi Hull has found that nonprofit board members are often passionate about the organization, but it takes more than passion to govern well.

Because credit union boards are members too, they know how they’re treated as members and what they expect from their financial institution. But at the same time, they need to be more savvy than the average member about what’s happening at the credit union.

Mimi Hull believes CEOs have a responsibility to train their boards so those boards, and likely the CEOs themselves, can be more effective. Hull is president/CEO of Hull & Associates, which provides consulting, speaking, training and facilitation services to a wide range of businesses from Fortunate 500 companies to nonprofits.

“The question a CEO must ask is, Does he or she really want an advisory board or an admiring board?” Hull said. “By that I mean, do they want the board to simply bless everything that goes on? The CEO and the board chair must determine what they want from the board. That can affect where they recruit for new board candidates.”

In her newsletter, Hull comments, “We have found that nonprofit board members are often passionate about the organization, but it takes more than passion to govern well. Board members must understand their role, their relationship to staff and leadership techniques.”

“Individuals new to the nonprofit arena need to be taught the nuances of working with volunteer organizations. Veteran board members must continually train lest they get stuck in ‘but we’ve always done it that way,’” said Hull.

“Everyone needs to be on the same page when it comes to explaining to others what your organization is all about. Therefore, create training complete with documents that include an elevator speech and supporting statements that clearly articulate your organization’s mission, activity, history and traditions.”

Hull agreed that there is a balance of power between the board and the CEO. According to Hull, the CEO should let board members know why they were chosen, what they’re expected to do, what they should know and what they’re expected to give to the organization.

Hull said that it can sometimes be difficult to identify training needs, because the board can’t know what it doesn’t know. The board chair and the CEO should work together to identify what the board needs to become more effective.

The relationship between the board and staff may be one subject of training, she said. Hull works with many different boards and has found that they typically fall into two categories – either too involved or too hands-off in the staff’s daily routines. Both situations can present problems to the staff and CEO, she said.

“If a board member starts telling the marketing director what to do, that’s not appropriate,” Hull said. “They may make a recommendation, but they should not be supervising staff.”

“The board needs to know their role and responsibilities, and the limitations to those. What can they do, and what aren’t they allowed to do? Another way I like to look at this is the board is the what and the staff is the how,” Hull indicated.

“One thing the board may be looking at is, What are the policies? What is the strategic plan? An appropriate conversation with the CEO is, Where do you see the organization in three or five years? Is budget and accounting information accurate? Once the budget is set, is the budget being followed?”

Hull applauds the regulators’ idea to establish financial literacy requirements for credit union board members. NCUA’s Rule 701.4, mandating new directors learn to read and understand their credit union’s balance sheet and income statement within six months of joining the board, has prompted new attention to board training. This has led to the creation of a wide range of options from seminars to webinars.

According to Hull, the CEO should be working with the board chair to establish a mutually agreeable time for scheduled training. The CEO may also identify needs, such as team-building, that call for training.

Hull also believes people will support what they help create. So the trainer should contact, if not every board member, at least a few board members to learn what they see as the strengths of the board and opportunities for improvement.

Hull added that an outside person can ask important questions, such as, Are there factions on the board? What are the issues? Why are these issues occurring?

Hull recalled one time when she surveyed in a board in which 80% members told her, “Please don’t say this out loud, but we are not a functional board.”

“As the facilitator of board training, I told them 80% had said they were not a functional board. We put a light on the elephant in the room,” she added.

“Each person thought they were the only one telling me that. The CEO was painfully aware of how bad the board was, but the board president was unaware and negative,” Hull said.